From Modern Healthcare, October 31,2016 which reported on the private purchase of Team Health by the Blackstone Group. With roughly 19,000 physicians and $80M in earnings, there are likely big changes in store for TeamHealth.
Physician-staffing giant TeamHealth has agreed to be purchased by affiliates of the Blackstone Group for $6.1 billion.
The Blackstone price is an 18% premium above TeamHealth’s Friday closing stock price of $36.85.
Hedge fund Jana Partners has pledged to sell its nearly 8% stake in TeamHealth as part of the deal. Early this year, Jana fought for and won three board seats at TeamHealth after criticizing management and the board of directors for strategic missteps in guiding the company. Jana is TeamHealth’s third-largest shareholder. The largest is Wellington Management with 7.1 million, or 9.8%, of the outstanding shares. Fidelity Management & Research is next at 6.7 million share, or 9.1%.
The merger agreement includes a “go-shop” period. That means TeamHealth and its board of directors may evaluate and potentially enter negotiations with parties that offer alternative proposals during a 40-day period following the execution date of the definitive agreement.
Knoxville, Tenn.-based TeamHealth is soon to be surpassed as the nation’s largest physician-staffing company for hospitals when AmSurg and Envision Healthcare complete a merger in November.
TeamHealth posted net income in its second quarter of $18.8 million, or $0.25 diluted net earnings per share, compared with net earnings of $28.9 million, or $0.39 diluted net earnings per share, in the second quarter of 2015.
Revenue in the second quarter was $1.12 billion, a 28% increase over the year-earlier quarter. TeamHealth said the increase was largely the result of the $1.6 billion acquisition of IPC Healthcare late last year.
In contrast, the merger between AmSurg and Envision, scheduled to be completed in November, will create a physician-staffing giant with combined revenue of about $8.5 billion compared with TeamHealth’s less than $5 billion in annual sales.
TeamHealth drew investor ire in late 2015 when management and the board rejected a $5 billion merger offer from rival AmSurg.
At the time, TeamHealth’s stock price was trading about $60 per share.